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Bad Things Come In 3s.

Christ. This was just the kind of day that makes you dread the rest of the week.

First thing in the morning, traders had to cope with Groundhog Day re: everyone on the face of the planet professing to have some kind of profound take on what happens when 10Y yields cross the 3% Maginot Line. Sure, there’s a laundry list of reasons why this is a big deal, but on the other hand, there’s not going to be an Elmo nuclear moment if we finally do top the “magic” number.

Next up was Trump, kicking the week off with a little xenophobia, insisting that a NAFTA deal might end up being tied to Mexico making a concerted effort to keep the “caravans” from reaching the U.S. border.

Despite the Democrat inspired laws on Sanctuary Cities and the Border being so bad and one sided, I have instructed the Secretary of Homeland Security not to let these large Caravans of people into our Country. It is a disgrace. We are the only Country in the World so naive! WALL

Mexico, whose laws on immigration are very tough, must stop people from going through Mexico and into the U.S. We may make this a condition of the new NAFTA Agreement. Our Country cannot accept what is happening! Also, we must get Wall funding fast.

Next thing you know, he’ll be tweeting GIFs of World War Z and trying to pass them off as security camera footage from the southern border:

And speaking of morons who shouldn’t be allowed to have Twitter accounts, Jeff Gundlach showed up to Sohn dressed in a clown costume to push a Facebook/O&G ETF RV trade.

So just kind of running down the list there, Treasurys did hold on to losses, but 10Y yields came down from the highs and the curve got right back to flattening which, as Bloomberg’s Brian Chappatta quipped, is about as certain as death and taxes these days (until it’s not). Here’s the 5s30s:

The dollar was obviously one of the big stories today, having risen for five consecutive sessions:

As a reminder, the correlation between 10Y yields and the greenback is, well, back, which could be bad or good for dollar bears/bulls. If 3% holds, well then that short might not get squeezed further, but if it doesn’t, then who knows (more on all of this here).

Trump’s obligatory Monday morning racist diatribe didn’t help the peso which was already under pressure on jitters about Obrador. Remember what we said on Sunday night in our week ahead preview? If not, here:

Oh, and watch the Mexican peso for any further signs that domestic politics (as opposed to Donald Trump) is starting to be the main driver.

On Monday it was both.

Facebook fell as the above-mentioned Krusty plugged his absurd RV trade at Sohn:

U.S. equities were mehhh. It’s worth taking a step back to see how far we haven’t come over the past six sessions:

Dangerous lines:

Aluminum was hit hard to start the week after the Treasury suggested sanctions on Rusal could be lifted. Notably, oil pared losses aggressively to trade higher as the stakes were raised in the Yemen conflict:

Saleh Al-Sammad was killed in the coastal province of Hodeidah on Thursday

Writing about a subject is the best
way to educate yourself about it, and when I flick through past work I remember how much
they taught me, if no one else. Mainly they taught me that I didn’t know very much. But they
also taught me that most other people didn’t know much either. Thus, some key themes
which stand out include the illusory control of policy makers, the presumed knowledge of
those looking to them to actively do good, the ease with which we fool ourselves, and how
best to protect capital in the face of such unavoidable uncertainty. -- Dylan Grice